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Park Ridge IL Medicaid and Estate Planning Legal Blog

Saturday, April 15, 2017

ABLE Accounts for the Disabled

Can a disabled person and their family save money without jeopardizing their government disability benefits?

Special needs planning in Illinois just became a bit easier for some disabled people and their families.

Until recently, government benefit programs for the disabled such as Medicaid and Supplemental Security Income (“SSI”) have limited the recipient’s total personal assets to $2000. With such a low total assets cap, and with the devastating penalty of suspending government benefits for exceeding that $2000 limit, disabled recipients and their families weren’t able to save money for a rainy day or any of the disabled person’s supplemental needs.

Now that is all changing. Illinois has become one of a 14 state coalition to allow disabled or blind people and their families to save money by opening tax-deferred investment accounts.

“Achieving a Better Life Experience” accounts-- less cumbersomely-referred to as (“ABLE”) accounts-- allow the disabled to save money without jeopardizing their government benefits subject to certain restrictions. In addition, when the earnings in the ABLE accounts are spent on "approved disability expenses" such as education, housing, medical costs, and more they are not taxed. As a tax-deferred investment account, ABLE accounts have been compared to a college savings plan.

Of course, there are federal and state limitations and qualifications on ABLE accounts. First, ABLE accounts can only be opened for beneficiaries who became disabled before age 26. In addition, the ABLE account can only grow up to $100,000 before the suspension of Social Security benefits. Total annual contributions-- which can come from beneficiaries as well as third parties ––can't exceed $14,000.

Assuming the above criteria is met, ABLE accounts may be opened by those on SSI or Social Security disability benefits (“SSDI”). Even those who are working and do not receive government disability benefits can open an ABLE account with their doctor’s certification of eligibility.

Proponents of ABLE accounts support the idea that disabled people and their families can have savings accounts that will allow for the disabled person to live a fuller life by funding supplemental needs beyond the very basic expenses covered by government benefits programs. It also allows peace of mind in the event of a financial emergency just has any family would want to enjoy.

While some criticize the 26-year-old age limit, the most controversial aspect of the program is each state’s ability to wipe out all or part of the ABLE account savings when the beneficiary dies. Specifically, the state can "act as a creditor and recoup the Medicaid dollars they paid out while the account was open", either emptying the account of the actual amount of Medicaid services or the full balance in the account, whichever is less. Currently, only Pennsylvania opted out of the payback provision. Reportedly Illinois is considering that option.

Now more than ever, disabled people and their families should seek the guidance of an experienced special-needs planning attorney to help navigate this ever-changing and complex area of law.

If you are disabled or have a loved one who is disabled, and need assistance with special needs planning or Medicaid planning, the Law Office of Thomas J. Hansen can help. Call us today at 847-292-1800 to request a free consultation for estate planning. From our office in Park Ridge, we represent clients throughout the state of Illinois.


Thomas J. Hansen, LTD. assists clients in Park Ridge, Cook County, IL as well as Niles, Des Plaines, Glenview, Norridge, and Rosemont.

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